Differences between Reit and Business Trust

dividend-stockEvery now and then, i got question regarding to dividend stock after my post on dividend stock to be in your porfolio. With most dividend stocks fall under Reit or the Business trust model, but as an investor, do you know what is the differences between both? I got this nice article from http://www.fool.sg/2015/01/05/3-important-differences-between-a-reit-and-a-business-trust-that-investors-have-to-know/ that have a good comparison between both.

For the full list of REIT listed in Singapore, do click here, and if you interested in Business Trust listed in Singapore, please click here instead. 🙂

3 Important Differences Between A REIT and A Business Trust That Investors Have To Know (From fool.sg)

The Singapore stock market is home to quite a wide selection of real estate investment trusts (REITs) and business trusts. In fact, Singapore’s stock exchange is also one of the few exchanges in the world which allows the listing of business trusts.

Within Singapore’s market benchmark the Straits Times Index (SGX: ^STI), there are already three trusts amongst its 30 constituents. The trusts include Ascendas Real Estate Investment Trust (SGX: A17U), a REIT, and Hutchison Port Holdings Trust (SGX: NS8U), a business trust.

It might be easy to lump a REIT and business trust together and view them similarly. But, there are actually important differences between the two types of securities that investors have to know before they invest in them.

1. Legal structure

Unlike a normal corporation, both business trusts and REITs are managed through a trust deed with the trustee having full legal ownership of the trust’s assets instead of the trust’s unitholders.

The trustee of a business trust is considered the trustee-manager and so it’s the same entity which owns and manages the assets on behalf of the unitholders of the business trust. Meanwhile, a REIT requires a trustee to hold the assets and a separate manager to manage the assets for unitholders. The trustee for a REIT must be a licensed entity approved by the authorities.

Unitholders can also choose to remove the manager of a REIT if there’s a vote on the matter and more than 50% of the votes say “yes” on the move. As for a trustee-manager of a business trust, it can only be removed if 75% of votes from unitholders are in favour of such a move.

2. Differences in leverage

According to the “Code on Collective Investment Schemes,” a REIT is only allowed a limit of 35% for its gearing ratio. A REIT can boost its gearing ratio to 60% if it obtains a credit rating from rating agencies (these credit restrictions might be altered in the future).

Business trusts on the other hand, are not required to subject themselves to any borrowing limit. It is thus important for unitholders to keep an eye on the gearing ratio of a business trust as the level of leverage employed might get out of hand. There have been instances of business trusts overstretching themselves, with the experience of First Ship Lease Trust (SGX: D8DU) being a good example.

In this sense, business trusts might be seen to be riskier entities than a REIT since there’re no hard limits on how much the former group can borrow.

3.  The level of distributions

Another key difference between a business trust and a REIT is that the former is is not obligated to distribute any of its income while a REIT must pay out 90% of its “distributable income” under the Income Tax Act. So for investors looking for stable yields, a REIT might be considered a “safer” investment in this sense since a REIT has to pay a distribution.

Foolish Summary

A collection of real estate might be bundled up as a business trust instead of a REIT – there are no restrictions on the matter. But, an investor has to realise that, there are fundamental differences between the two structures even if they do own the same type of asset. Investors should take note about these key issues before investing in any of the two.

Singapore Savings Bond, Your New Savior?

A quick glance of the Singapore Saving Bond by BT.

SSB-BT

How can you benefit from this new Singapore Saving Bond?

Given that MAS still has not released the full detail for this new upcoming Singapore Saving Bong especially on the limit of funding that you can purchase with. So at this stage, it can be quite hard to formula any strategy in your wealth creation plan.

But in order for me to make any comparison, i will assume the limit of SGD 50k per individual. One big advantage of having this SSB as part of your portfolio will be it having better or similar interest rate with Fixed Deposit but without having to lock in your fund for X amount of time. And but it will be crucial, especially in times of emergency. Having a step up interest rate which mean the interest rate increase from 0.9%(First Year) till 3.3%(Tenth Year), it will be equivalent to an average interest rate of 2.4% over 10 ten years.

For such plan, i will recommend it to my parent or any retired elders. Mainly due to the flexibility in surrendering the SSB at any times and plus the good credit rating for SSB that backup by Singapore Government. Except if the elders are still working (Crediting of salary which is one of criteria for having additional 1% ) and they know how to operate internet banking, then like else, OCBC 360 may be better. Read on why i think OCBC 360 will be better

For working adult, i will think it’s better to have your fund in Saving Account like OCBC 360 (Note : For OCBC 360, interest rate will be reduced from max 3.05% down to 2.05%. And cap at SGD50k. For detail, click here). As a working adult with/without kids, i can easily earn up to 1.55% with OCBC 360, and max of 2.05% if all criteria being meet.

With OCBC 360, i could easily earn 1.55% or max of 2.05% each year, but on another hand for SSB, i can only achieved an average of 2.4% if i stick around for 10 years instead. A different of 0.35%(3.05%-2.4%) if we compare over ten years, whiles it will be 1.15%(2.05%-0.9%)for 1 year. Unless i in SSB for a longer term, else i will be better off with OCBC 360 or other saving account with higher interest rate.

But before making any decision, let wait for further announcement from MAS. For more detail on SSB, click on SSB factsheet for the full detail.

How to start your 2nd income using Internet

changes-in-technology-6336Changes that Internet bring on

Let’s face it, comparing with the past, we now order more stuffs online when we fancy some gadget or clothing. Review, comparing and book more flights and hotels either online or via our mobile than ever. More readily to share werid incident or voice out our comment/picture on twitter or on Facebook. The world is shrinking right before us as Internet is binding us even closer than before.
The up-rising of Internet play an important role in enabling the ease of wealth creation for the common people out in the street. Opening a retail shop is never easy, the owner need to fork out substantial capital just for rental, renovation and hiring. But with eCommerce players like eBay, Taobao and Weebly, they have create a complete solution platform for anyone to open their virtual shop in a instance! Furthermore this virtual shop run 24 hr a day, 7 days a week!
With the level playing field platforms these eCommerce players bring to the table, and together with other Internet innovations, it just simply spur growth in various sectors like Logistics and create new sector like Online Marketing and Online 3rd Party Travel Agent and more. Wealth creation has long spill from this eCommerce cup into other. Business owner can now have Social Media Audit to review their online presence performance. That was never being done in the past till Internet bring on the series of changes.
cat-saying-hooray_thumb1Ok, after knowing that Internet have changed our life, what can we do to leverage on it? Now we are in a much better time and position to leverage on these improvement and start our second income using Internet itself. Besides that, considering what will happen after the musical chair game (we referring to the series of money printing action by various economic bodies) end?  The world could possible plunge into another recession. Jobs will be lost if that happen. It is time for us to roll up our sleeves, and start to learn a skill or to use your current skill to generate income on Internet.

 

Blogging

After starting up your personal blog with sizable followers, you could relied on advertisement as your income. You can using services like Google AdSense, that post advertisement links on your blog. When your blog readers click on those advertisement links, Google AdSense will pay you of the advertisement commission. And with some luck and with your interesting, well-written articles, you could even being approached by companies who want to reach your follower base with graphical advertising in your blog. There are true stories of blogger that able to quit their day jobs and blog full time.

Freelance Your Skill Online

As Internet help to close up the distance between each continent, there are a lot of Project Market places  like Guru where people list their project requirement online. It range from programming to content writing. You could easily make your skill that you mastered in your Day Job and become a freelancer.

Sell Your Products Online

First of all, check and review your exiting hobby. You never know one of your hobby could generate product and create income for you. For example, you may love to take picture and that is of commercial value and you can start to sell online. One of my friend whom is very much into Wild Life and her picture is featured on NationalGeoGraphic http://yourshot.nationalgeographic.com/photos/5196177/ and she could easily started to sell it online(https://submit.shutterstock.com/). What could be better than to enjoy your favorite skill/hobby and get paid at the same time!

Besides your hobby, you could also sell product that you are familiar with. Just like one of my friend whom have his own label and sticker products, that is very popular with children and young adults, listed in one of the popular eCommerce platform Qoo10.

SEO Review

Search engine optimization (SEO) is a growing area for Internet-based employment. It is common for businesses to use SEO as a means to improving their results from a search engine as more people turn to search engine like Google to look for both products and services.

Working with Online Marketing Company, you could turn in as a contract SEO reviewer. Such job normally involve evaluation task by judging a user’s intent based on the key word combinations provided and your own knowledge of popular culture in the user’s locale. Then, you use a set of given guidelines to evaluate how particular search results match that user’s intent. As SEO is a ongoing online marketing process, it can offer a steady income for you.

Investment

What we mean here, is investment choices in the future and not now. Guess some of you may be puzzled of what i mean by “investment in the future and not now”. Although eCommerce, Logistics, Online Marketing and Online 3rd Party Travel Agent business are blooming, but there are a lot of danger lurking around ready to plunge the world economy into another recession. And it better NOT to invest in such industries now, unless you know what you doing. What you should do, will to be investing in the mentioned industries when we are in the mid of recovery of next recession.

 

We will love to hear from your guys if you have any another ways to generate income online. 🙂

How to benefit from Singapore Budget2015?

budget2015_logo

About SGBudget2015

In SGBudget2015, there are a lot of measures that benefit most of the Singaporeans in the Middle and Low Income Tier, in area like Personal Income Tax rebate, Childcare and Exam fee rebate. It also come with scheme that help to lighten financial load of Singaporean that taking care of their parent. The list go on, and you can find ton of information online like https://twitter.com/MOFsg or http://www.straitstimes.com/news/singapore/more-singapore-stories/story/singapore-budget-2015-15-things-cheer-about-20150223.

What will be more important is to analyst the influence of Budget2015 over Singapore Stock Market. We need such information to empower us and assist us on the path of wealth creation. So let’s get started!

Key Influences of SGBudget2015

  • Govt expenditure will continue to increase over the medium to long term, driven by healthcare, public transport & T5.
  • A new Changi Airport Development Fund will be set up, with an initial injection of $3B
  • Temasek to be included in Net Investment Returns framework; add. resources to fund govt expenditures
  • Petrol duty rates for premium and intermediate grade petrol raised by $0.20/litre and $0.15/litre respectively
  • Credit – S’porean aged >= 25 to get initial credit of $500 from 2016 for education & training

As the initial fund for public transportation being locked in, the transport companies SMRT and SBS Transit will be back in spotlight with Lui Tuck Yew announce on the bus asset purchase plans pretty soon. Comfort should also get to be part of the spotlight gang as it not impacted from the come-into-effect increased petrol duty rates, as it uses diesel for its fleet.

As plans for Terminal 5 Airport materializes with an initial injection of $3B new Changi Airport Development Fund, certain construction company and logistic company like Yongnam, CWT and Singpost may have big rally story cocking up and bang up soon.

Scheme Skillsfuture will soon put $500 into education & training account for most of the working Singaporean adults. With this Skillsfuture Fund spill over, Education operators like Raffles Education should enjoy the soak up too.

Previously, Singapore government tap on returns generated on its net assets managed by the Monetary Authority of Singapore (MAS) and GIC, and now Temasek is being listed to served Singapore. Temasek may need to generate safer return, and forcing it to make better investment decision. We can started to consider those companies that Temasek invested in after this NIR framework update.
Update
Do not chase any stock especially when it has rally, instead look for sign of weak supply or higher low, before enter any long position!

 

Disclaimer:
Articles in this blog contained the personal views and opinions of the author and are based solely on his perspectives and/or experiences, except for articles that originated from other sites, shall bear their own disclaimer. They do not represent any form of statements made by any organizations.

The articles are for information only and readers must not misconstrued them as financial advice. The author does not work in the financial industry nor is he a licensed financial adviser authorized to provide financial advisory. And purpose of articles been written in mind for main purpose of knowledge sharing & discussion, never to induce or promote any insider trading or manipulation activities.

Any form of investments carry risk, so readers should engage a licensed financial adviser to assess if they are suitable to invest in such products. The author of this blog will not be liable for any form of damages that may arise from the use of information, products and services directly or indirectly featured or implied in this blog.

Are You Too Old to Be An Entrepreneur?

When anyone mention this hippy word – Entrepreneur, this image of a he is in his early 20s, sporting some messy hair and probably in blue jeans and with a hoodie will appear in your mind.

One of the best representative of the word will be Mark Zuckerberg-Founder of facebook that probably inspired more youngster to seek out such dream and vision. But the truth is many entrepreneurs don’t even think about starting their own business till into their 30s, 40s, and even 50s, only after many years of work experience.

David Sanders, the founder of Kentucky Fried Chicken’s, held a number of jobs in his early life, such as a fireman, insurance salesman and running filling stations until 1952 where the first “Kentucky Fried Chicken” franchise start in Utah. Meanwhile,  Joanne “Jo” Rowling, a British novelist best known as the author of the Harry Potter fantasy series, finish her first novel in the series in 1997 after facing some rough going in her life. And her fortune estimated at ÂŁ560 million or more.

There’s still time, fret not. And if you worked a while, you probable pick up some real skill about life and business that will be helpful in your latter part of Entrepreneur path. You may start out the Entrepreneur path as part time, probably as your second income, and with you still on your full time job. And who know that you may just hatch the next big thing that come from Singapore?

Start now to think entrepreneur! You should start as part time whiles you still on your full time job.

Introduction to Supply and Demand

What is Supply and Demand?

Every day stock prices change due to the result of market forces in respect to supply and demand. When more people want to buy a stock (demand) than sell it (supply), then the price moves up (Refer to the green box in the diagram below).

On the other hand, if more people wanted to sell a stock than buy it, there would be greater supply than demand, and the price would fall(Refer to the red box in the diagram below).

sti-1yearAnd when you have supply and demand been acted out on bigger time frame, you will be presented the overall trend direction. Is it trending up, down or sideway? Below is the chart for STI since 1980 till now. Within the chart, there were a lot of supply and demand (waves) going on. From the chart, it is easy to say that it’s a trending up chart. Reason been the various higher low. We can say that there more buyers than sellers, or the buying strength is more superior than the selling strength. And you as a trader, it important for you to keep a lookout and analyses the strength of each wave. One simple method will be to lookout for a higher low for up trend or lower low for down trend.

Example, look at the black box as below, you can clearly identified a series of higher low and higher high and it looks like it’s a compressed spring waiting to unleash the stored energy within it. Although the probability for a up trend is higher, but it be safer to get in any long position when there is dip and be sure to lookout for a serious supply wave that bleach the previous low.

sti-longerViewDisclaimer:
This article contained the personal views and opinions of the author and are based solely on his perspectives and/or experiences, except for articles that originated from other sites, shall bear their own disclaimer. They do not represent any form of statements made by any organizations.

This article is for information only and readers must not misconstrued them as financial advice. The author does not work in the financial industry nor is he a licensed financial adviser authorized to provide financial advisory. And purpose of article been written in mind for main purpose of knowledge sharing & discussion, never to induce or promote any insider trading or manipulation activities.

Any form of investments carry risk, so readers should engage a licensed financial adviser to assess if they are suitable to invest in such products. The author of this blog will not be liable for any form of damages that may arise from the use of information, products and services directly or indirectly featured or implied in this blog.

How you interact with Stock Market? You React And Response?

Came across this meaningful article online and i will like to share with the readers out there. The same concept describe below also applied to the way how you handle your emotion in stock market when it turn on you.

React And Response

At a restaurant, a cockroach suddenly flew from somewhere and sat on a lady. She started screaming out of fear. With a panic stricken face and trembling voice, she started jumping, with both her hands desperately trying to get rid of the cockroach – Her reaction was contagious, as everyone in her group also got panicky.

The lady finally managed to push the cockroach away but …it landed on another lady in the group. Now, it was the turn of the other lady in the group to continue the drama. The waiter rushed forward to their rescue.

In the relay of throwing, the cockroach next fell upon the waiter. The waiter stood firm, composed himself and observed the behavior of the cockroach on his shirt. When he was confident enough, he grabbed it with his fingers and threw it out of the restaurant.

Sipping my coffee and watching the amusement, the antenna of my mind picked up a few thoughts and started wondering,

Was the cockroach responsible for their histrionic behavior? If so, then why was the waiter not disturbed? He handled it near to perfection, without any chaos.

It is not the cockroach, but the inability of the ladies to handle the disturbance caused by the cockroach that disturbed the ladies.

I realized that, it is not the shouting of my father or my boss or my wife that disturbs me,
but its my inability to handle the disturbances caused by their shouting that disturbs me.
Its not the traffic jams on the road that disturbs me, but my inability to handle the disturbance caused by the traffic jam that disturbs me. More than the problem, its my reaction to the problem that creates chaos in my life.

Lessons learnt from the story :

I understood, I should not react in life, I should always respond. The women reacted, whereas the waiter responded. Reactions are always instinctive whereas responses are always well thought of, just and right to save a situation from going out of hands, to avoid cracks in relationship, to avoid taking decisions in anger, anxiety, stress or hurry.

Introduction to Investment and Trading

I still recall my first encounter with stock market, there’s a ton and ton of jargon to learn. Most are straightforward, with some of it depends on your style or approach (how you buy and sell stocks) to stock market. Are you seeking fast return, or a gradual capital increment suit you. Of course, there is no fixed styles, you can even stick to a hybrid combo in respect of your work/family commitment.

So what is Investment and Trading all about?

Although the main aim of both trading and investing is to secure your profit in the financial(stock, commodities, currency pairs, index or other instruments) markets, but the main differences will be Time frame and Method of Analysis.

  • Time Frame

The goal of a investor will be to build wealth over an extended period of time by buying and holding on a portfolio of stocks, mutual funds, ETF, bonds and other investment instruments. A trader, on the other hand, involves a more frequent and aggressive buying and selling of stock, commodities, currency pairs, index or other instruments, as to secure profit within a shorter time frame.

  • Method of Analysis

For Traders, they often use technical analysis, such as moving averages, stochastic oscillators and etc, to assist them in determine the entry and exit point for a chart, where investor relied on fundamental analysis to filter off hundred and thousands stocks and to discover the gems.

Which Style will be better?

Some reader had asked me which style will be better to build wealth, but it all boil to your account size, amount of time that you can dedicated to trading, level of experience, personality and risk tolerance. All roads lead to Rome, it just a matter of times.

What is my style?

As for me, i use both style in both. In short, i combine both TA and FA in my Trading and Investing. For example, both TA and FA will be used for my index trading with a timeframe ranging from minutes to hours. And i seldom hold any index position overnight as I treasure my sleep.

Reports like the GDP, Consumer Confidence Index, Interest Rate will be considered as FA for me. Reason being that those reports give you a good indicator of the general financial status of the country and plus the rest of associated economy bodies. For me, i relied on http://www.forexfactory.com/calendar.php for such information. The recent Controlled QE by China has ignited the bull spark in  long-depressed stock market. For any QE that increase liquidity from the Central Bank, it has the tendency to boast up the country stock market. In this case, will you think it will be a better idea to long or to short that market? Of course the stock market will dip at some point, but you will  probably secure more profit for long position.

We have China, Japan and recent QE move by Europe to join in the fun, i noticed this defy sign among countries that release QE. EUR drops. YEN drops. Only RMB dollar rallied!

As for TA, i use supply & demand, support & resistance, moving averages, stochastic oscillators, fibonacci and plus Wyckoff Trading Method. All these methods, you could easily google it in detail, but you wish to discuss with me in detail, do feel to email to me fredrick@bigfatpillar.com. We could even do a live index trading together.

SSE-daily

My indicator setup for Index Trading

 

 

 

 

 

 

 

 

 

 

 

 

My 2015 battle plan

After analyzing the world economy and the recent transfer of wealth in Oil sector, i will be focusing on the following markets and sectors.

  • China Stock Market (With Shanghai and Hongkong interconnected, you could get any China “A” Share listed companies from Hongkong stock exchange)
  • Property in Japan (With QE in place, property in Japan will be boasted)
  • Energy sector
  • Gold (With more and more countries join in the QE wagon, it seem like a lot of countries are desperate to pop up their economies. Danger will be lurking around the corner when the QE party is over)
  • USD currency (US has been maintaining near zero interest rate for a long time, and it almost certain that US will increase interest rate this year and that will attract investor back to USD.)
  • CASH – Last of all, do not get emotion attached to any holding, close your position/s except for Gold when there is sign of crises. As Cash is king!

Disclaimer:
This article contained the personal views and opinions of the author and are based solely on his perspectives and/or experiences, except for articles that originated from other sites, shall bear their own disclaimer. They do not represent any form of statements made by any organizations.

This article is for information only and readers must not misconstrued them as financial advice. The author does not work in the financial industry nor is he a licensed financial adviser authorized to provide financial advisory. And purpose of article been written in mind for main purpose of knowledge sharing & discussion, never to induce or promote any insider trading or manipulation activities.

Any form of investments carry risk, so readers should engage a licensed financial adviser to assess if they are suitable to invest in such products. The author of this blog will not be liable for any form of damages that may arise from the use of information, products and services directly or indirectly featured or implied in this blog.

Casualties From Swiss Shock Spread From New York to New Zealand

EuroVsSwissFrancHow it started

Pending announcement from European Central Bank (ECB) to launch a full-scale quantitative easing program (QE) on 22 Jan 2015, has lead to Swiss National Bank (SNB) to abandon the capping of franc at 1.20 to the euro, introduced since September 2011.

Besides they also have their key interest rate cut from -0.25% to -0.75%, raising the amount investors pay to hold Swiss deposits.

And such action have caused massive impact by trigger massive automatic and painful cut loss due to leverage call (If you look at the chart on the left). Watch out if you have fund in oversea trading house.

 

Article : Casualties From Swiss Shock Spread From New York to New Zealand

Losses mounted from the Swiss currency shock as the largest U.S. retail foreign-exchange brokerage said client debts threatened its compliance with capital rules and a New Zealand-based dealer went out of business.

FXCM Inc., which handled a record $1.4 trillion of trades by individuals last quarter, said clients owe $225 million on their accounts after the Swiss National Bank’s decision to abandon the franc’s cap against the euro roiled markets worldwide. Global Brokers NZ Ltd. said losses from the franc’s surge are forcing it to shut down. IG Group Holdings Plc estimated an impact of as much as 30 million British pounds ($45.5 million) and Swissquote Group Holdings SA set aside 25 million francs ($28.4 million).

“I would be astonished if we did not see more casualties,” Nick Parsons, the London-based head of research for the U.K. and Europe at National Australia Bank Ltd., said by phone from Sydney. “This was a 180-degree about turn by the SNB. People feel hurt and betrayed.”

The franc surged as much as 41 percent versus the euro on Thursday, the biggest gain on record, and climbed more than 15 percent against all of the more than 150 currencies tracked by Bloomberg. Dealers in London at banks including Deutsche Bank AG, UBS Group AG and Goldman Sachs Group Inc. battled to process orders yesterday when the SNB surprised markets with its announcement in Zurich.

Unprecedented Volatility

Market turmoil from the move extended into a second day as Asian shares dropped with U.S. index futures, while Japanese and Australian government bond yields plunged to records as investors sought haven assets.

“Clients experienced significant losses” after the franc’s surge, FXCM said in a statement dated Jan. 15. That “generated negative equity balances owed to FXCM of approximately $225 million.”

The brokerage dropped 15 percent in New York trading yesterday to an almost two-year low of $12.63, leaving the company valued at about $596 million. The shares were cut to sell from neutral by Citigroup Inc., which lowered its price target to $5 from $17.

Spokeswoman Jaclyn Klein didn’t immediately respond to calls to her mobile and office phones.

The U.S. Commodity Futures Trading Commission allows investors to put down as little as 2 percent of the value of their foreign-exchange bets. Brokers may get stuck with the balance of losses suffered by clients who used leverage, borrowed on credit cards, or did both to bet against the franc.

Leveraged Trades

Drew Niv, FXCM’s chief executive officer, said that individual currency traders are enticed by the chance to control large positions with little money down, in remarks that were published in Bloomberg Markets magazine’s December issue.

“Currencies don’t move that much,” he said. “So if you had no leverage, nobody would trade.”

The company warned investors in a regulatory filing last March that its risk controls were imperfect. FXCM had 230,579 retail customers on Dec. 31. They traded $439 billion of currency in December, with an average of 595,126 trades a day.

“Some of our methods for managing risk are discretionary by nature and are based on internally developed controls and observed historical market behavior,” the company said in the regulatory filing. “These methods may not adequately prevent losses, particularly as they relate to extreme market movements.”

Swiss Surprise

Most of FXCM’s retail clients lost money in 2014, according to the company’s disclosures mandated by the CFTC. The percentage of losing accounts climbed from 67 percent in the first and second quarters to 68 percent in the third quarter and 70 percent in the fourth quarter.

The SNB ended its three-year policy of capping the franc at 1.20 per euro a week before the European Central Bank meets to discuss government bond purchases to boost the euro-area economy. Such a policy, known as quantitative easing, could spur pressure on the franc to appreciate against the euro. The SNB spent billions defending the currency cap after introducing it in September 2011.

“Many clients were following the confirmed longstanding strategy from the SNB and were anticipating a weakening of the Swiss franc against the euro,” Swissquote said in its statement. The drop “left the clients with a negative balance and has prompted the bank to activate a provision of 25 million francs.”

Deutsche Bank was among dealers to suffer disruptions to electronic trading, with its Autobahn platform temporarily ceasing to provide quotes, according to a dealer from outside the bank. Auckland-based Global Brokers NZ said the market for francs was disrupted for hours.

HSBC Customers

“The majority of clients in a franc position were on the losing side and sustained losses amounting to far greater than their account equity,” Global Brokers NZ director David Johnson said in a statement dated Jan. 15 and posted on the website of affiliated company Excel Markets. All of the firm’s client funds are in segregated accounts and “100 percent of positive client equity or balance is safe and withdrawable immediately,” Johnson said.

HSBC Holdings Plc is investigating reports that customers in Hong Kong bought the Swiss franc below market rates when an online banking system failed to keep up with the currency’s gains after the removal of the cap.

Apple Daily and the Hong Kong Economic Journal cited unidentified bank customers as saying that they took advantage of the mistake yesterday evening. HSBC spokeswoman Maggie Cheung said in an e-mail that the lender was looking into the reports.

Fund Pain

IG Group shares fell 4.4 percent yesterday. The U.K. spread-betting firm said the financial impact from the surge in the Swiss franc was partially dependent on its ability to recover client debts.

The market turmoil turned the $1.9 billion John Hancock Absolute Return Currency Fund into the biggest loser among U.S. peers. It tumbled 8.7 percent yesterday, the steepest drop on record and the most among more than 2,000 U.S.-domiciled funds tracked by Bloomberg with at least $1 billion under management. The fund had its second-biggest short position in the franc at the end of November, according to the latest fact sheet on John Hancock’s website.

“When they pulled the rug under the market, the Swiss franc rallied against everything,” said Chris Weston, chief market strategist at IG Markets Ltd. in Melbourne. Many funds “would have been in a lot of pain last night,” Weston said.

 

Article from http://www.bloomberg.com/news/2015-01-15/new-zealand-currency-broker-closes-on-losses-after-swiss-shock.html